romans holiday

Some possibly plausible good news and bad news for the silver bugs. Silver tends to magnify the volatility we see in gold both to the down and up side. However, gold has not been volatile lately and has settled down into a very limited though elevated range [my theory for this is the effective monetization of gold post QE]. Being tied to gold, silver looks to be also becoming less volatile. If you compare silver to platinum [chart below], platinum has recently declined as markets sell off, but silver remains in sympathy with gold. The good news here is that the price will not go on a major decline unless gold does... and that is looking increasingly unlikely[of course, the caveat here is if there was another massive deflation scare and forced liquidation which would take all markets down, metals included though temporarily]. The "bad" news is that maybe silver is not going to shoot to the moon anytime soon. I am starting to think both gold and silver will remain relatively stable and will only go on a slide with the big one, that is, a possible looming liquidation a la Hoye.

The psychology is still alive and kicking in NZ and Australia.... will take some time to kill it off. A generation has known no different, yet a little perusal of history in that department would have told anyone curious that it was not the norm but an anomaly. Then again, greed has a way of blinkering people.

Can't think of any.

If he bought it for 375,000, then that is what it is worth. An asset is only worth what it can be sold for. I would not make an offer on a property today unless I was extremely embarrassed with the amount I was offering. I wouldn't want to tie up all my capital in property, and certainly wouldn't want to become overly indebted. Staying on the side-line and liquid in strong currencies, while assets deflate, is the sensible approach. Easy to do when you consider property is over-valued, and property ownership over-rated.

Assuming your points above, that the pound will remain relatively strong, that deflationary forces will dominate the economy, and that the bond market will remain intact, I would still come to the conclusion that house prices will crash. Rather than house prices being supported they will have to fall. How could the present support/bounce in house prices be sustainable when the population finally gets it that they are in for years of deflation and increasing unemployment? The main casualty of deflation is the deflation of asset prices and government policy is now at best only delaying an inevitable process. Consumer psychology has not completely turned yet, the house buying mania is still alive, there are still some cashed up buyers around.... once these conditions no longer abound, it does not matter what government does in order to support house prices and they will start to decline.

I would love to see silver remain volatile, and the longer the better. I hope it does not settle into a very tight range as gold has done. I think this will eventually happen for silver though for now, even if it did stay strong on the risk averse trade, it would sell off [temporarily] in a full blown deflation scare... if we get one.

I think most would agree the markets are looking very shaky at the mo. I think most would also agree that if the markets break, silver will be dragged down. And I know everyone would agree that if silver did dip it would be an excellent buying opportunity for the next wave up. It just depends if you want to trade a little, or not.... and remain invested.

QE and massive stimulus is essentially the attempt to devalue the currency. It is not working. Until someone points out how, practically, the currency can be promptly devalued, I feel safe holding Yen. The other thing is I am already heavily in monetary metal [50%] so am not nervous to be holding 50% in "fiat". This makes sense and is a way for the cautious investor to trade to a certain extent. As a deflationist, I am more confident of seeing the ratio at 80 than 50. That said, investors are still wary of inflation and it would not take much to spark an inflationary scare in the market. As an investor, I will also look to trade between the metals. When I'm wearing my trading hat, I will stick to Yen and silver, which I imagine can be traded more frequently on risk/risk aversion waves as opposed to the big moves such as might be seen with full blown inflation/deflation scares.

Yes, I have also been thinking about this. I do not think things will change too much in regard to the currency with a new government due to deflation on the ground. Some commentators are calling for it to strengthen in the short term. If I remember correctly, I heard the opposition was critical of the incumbent's fiscal policy and the latest round of handouts attempting to prime the economy. This article is a very sobering read: Japan’s Jobless Rate Hits Record 5.7% in Blow to Aso http://www.bloomberg.com/apps/news?pid=206...id=aASW1DJWcbho Japan is obviously not "exporting their inflation" today, and still no inflation even with trillions in stimulus.

Have lightened up some more on this latest peak. Selling for Yen of course.

imo gold will remain strong in any sell-off in the markets. QE and currency concerns has put a good floor underneath it. Siver is much more likely to go on a ride.

Looking at that chart brings to mind an idea I have been toying with lately. Take those two converging lines and carry them through so you have an X pattern.... with its axis remaining on the slight incline of course [roughly represented by the 50 MDA]. Carry through also the volatility in the price, so it is very stable at the beginning and becomes more unstable and volatile as the lines diverge. The decreasing volatility in the first section of the X would represent the volatility in gold as the market tried to price it and then its stability as it was effectively monetized as a currency post QE. The increasing volatility in the second section would represent the increasing volatility of currencies not gold itself. The apparent volaltiity will be in the price as the value of currencies wax and wane as capital flows between them and the market tries to find some new level for currencies. This volatility will represent the market's attempt to price other currencies [with which gold happens to be priced]. At some point we would price gold in the stablest currency which might be Yen... or who knows, perhaps SDRs. Massive volatility in gold might not be seen again until currencies start to get into trouble which could be a year away. Notice the lower extended line on a slight decline [second section of the x pattern] would put an approximate floor of 900 under gold while the upper line [previously the lower line] on the incline would put in a higher ceiling of between 1000 and 2000 depending on how far out you drew the line [it would be a rough mirror image of the first section] The price could become hugely volatile once again, between the diverging lines, but this time reflecting currency crises.

Quite the opposite of speculation imo.... capital flight. Yen is also strengthening.

The spike in silver co-incided with a drop in the dollar index. Nervous nelly market.

Gold looks pretty solid to me. It is in silver we should see all the fun.

Yes, I wonder if gold might be diverging from silver here and we could see silver down when gold is up. Gold the bonafide currency and silver still ranking a mere commodity.... for now.

Yen strengthening big time at the same time silver is weakening here.... something is up with the markets today... opps I meant down.

Ye, of little faith.

The volatility of gold has settled down these past few months. imo it is now being bought primarily as a currency not a commodity... and even a markey crash might not see much of a decline in its price. Looks to me the currency of choice.

I always get a little nervous when everyone is making the same call. Statistically, I wouldn't be surprised that if you made the opposite bet to the consensus you would come out on top. I am wondering if we could see the market flat and a bit to the downside here before we get a final rally up. Then in the fall we might finally see the big dip. Take with a heavy dose of salt of course.

I think the dollar is safer than Sterling. If/when the markets crash the dollar will spike. I imagine Sterling would go the way of the market. Then there is always Yen.

As predicted, The Yen continues to strengthen with downward pressure on silver.

Yeah, I found that a bit odd. It certainly doesn't fit in with my "monetization of gold" thesis.

I guess I should. I just find both perma-bears and perma-bulls a little tedious at times.

I have been lightening up a little on silver [still heavily in]. I notice that goldmoney always buys my silver above spot. I am not sure why this is so but I am not complaining. Spot was 1340 Yen an ounce Goldmoney bought for 1364 an ounce. Basically a 24 cent difference. I have noticed before I have got good prices a bit above spot.